Compliance Issues of New Energy Projects Occupying "Other Grassland"

With the accelerated development of new energy projects such as wind power and photovoltaic power generation, project owners are generally highly concerned about the compliance issues of land and grassland occupation during site selection and construction. However, in practice, there is often a special situation, that is, the land use approval disputes where the land type is "other grassland".

Due to the ambiguity of the current regulations on the definition of "other grassland", and the inconsistent standards of various natural resources and forestry and grassland authorities on whether it should be included in the grassland management scope and what land procedures should be followed, project owners are confused about the choice of compliance paths. For example, some provinces explicitly require that "other grassland" be managed in accordance with the "Grassland Law of the People's Republic of China" (hereinafter referred to as the "Grassland Law") and handle the requisition and occupation procedures, while other regions have differences in implementation due to differences in land classification.

Based on the latest policy documents, local practical cases and legal provisions, this article systematically sorts out the compliance points of new energy projects occupying "other grassland", focusing on the analysis of land use approval, tax risks and typical punishment cases, aiming to provide practical reference and risk prevention suggestions for project development.

Is "other grassland" considered "grassland" as defined in the Grassland Law?

According to Articles 2 and 74 of the Grassland Law, grassland refers to natural grassland and artificial grassland, while natural grassland includes grassland, grassy mountains, and grassy slopes. According to the "Notice on Carrying Out the 2023 National Land Change Survey" (hereinafter referred to as the "Technical Regulations") Appendix A, Table A.1, issued by the Ministry of Natural Resources on September 25, 2023, the definition of land use status classification is as follows [1]: Other grassland refers to "grassland with a tree canopy density <0.1, a soil surface layer, and not used for grazing".
Therefore, according to the above provisions, "other grassland" has the legal basis for management as "grassland" under the Grassland Law.
 

Should requisition and occupation procedures for grassland be handled for "other grassland"?

Regarding the management requirements for the requisition and occupation of "other grassland", there are currently no unified normative documents at the national level, but local authorities have gradually clarified the regulatory direction through interactive responses, for example:
 

1. In June 2023, the Forestry and Grassland Bureau of the Inner Mongolia Autonomous Region responded on its website that, based on Article 74 of the Grassland Law and the "Guiding Opinions on Land and Sea Classification for National Land Space Survey, Planning, and Use Control (Trial)", it is clear that "other grassland" belongs to the category of grassland and should be included in the management framework of the Grassland Law [2]
    
2. In July 2023, the Shandong Provincial Department of Natural Resources emphasized in its public reply that the occupation of "other grassland" must follow the requirements of the Grassland Law and the "Management Regulations for the Examination and Approval of Grassland Requisition and Occupation" [3].
    
3. In July of the same year, the Shanxi Provincial Forestry and Grassland Bureau further clarified that the examination and approval procedures for grassland requisition and occupation apply to "other grassland" [4].
    

It is worth noting that on September 12, 2023, the State Forestry and Grassland Administration made a reply through its official website, which is the first time that the national authority has defined the controversial issue. For a certain enterprise "Whether grassland review procedures are required for the occupation of state-owned unused land - other grassland by a centralized photovoltaic project" The key points of the reply are as follows:

Q: Does state-owned unused land - other grassland belong to grassland? Is it necessary to obtain a grassland use approval certificate?

A: According to the results of the third national land survey, "Other grassland" belongs to the category of grassland defined in the Grassland Law. According to the national standard of "Land Use Status Classification" and the "Third National Land Survey" classification system, grassland, as a primary land category, includes three secondary land categories: natural pastureland, artificial pastureland, and other grassland. Therefore, all types of grassland (including other grassland) are subject to the management of the Grassland Law, and the occupation of such land requires the legal handling of grassland requisition and occupation examination and approval procedures.

In summary, although there have been classification disputes in the local implementation of "other grassland", a clear consensus has been reached in current regulatory practice: The occupation of "other grassland" must follow the grassland requisition and occupation approval procedures, and project owners should strictly follow the specific requirements of the local authorities.
 

Does "other grassland" require "agricultural land conversion" procedures?

According to Articles 4 and 44 of the Land Administration Law of the People's Republic of China (hereinafter referred to as the "Land Administration Law"), China implements a strict land use control system, clearly requiring the division of land into three categories: agricultural land, construction land, and unused land. Among them, the prerequisite for handling the agricultural land conversion approval procedures (i.e., "agricultural land conversion") is that the construction involves the conversion of agricultural land to construction land.
It is worth noting that the Land Administration Law clearly includes "grassland" in the category of agricultural land, but in practice, the classification of "other grassland" has special contradictions:
1. Conflict between legal attributes and classification: According to the "Third National Land Survey Technical Regulations" (hereinafter referred to as the "Technical Regulations") [5] "Three Major Categories of Land Use Comparison Table", "other grassland" (land code 0404) is classified as unused land, while natural pastureland (0401), marsh grassland (0402), and artificial pastureland (0403) still belong to agricultural land. This leads to the fact that although the legal nature of "other grassland" is grassland, due to differences in land use classification, it cannot directly apply the "agricultural land conversion" approval procedures in practice.
2. In response to this contradiction, the "Notice on Supporting the Development of the Photovoltaic Power Generation Industry and Regulating Land Management" (Natural Resources Office [2023] No. 12, hereinafter referred to as "Document No. 12"), issued in March 2023, provides a clear path for new energy projects. The key points of this policy are as follows:
 

• Model innovation: Encouraging the adoption of the "grass-photovoltaic complementarity" model, requiring that the photovoltaic array land shall not change the landform, and shall be managed based on the national land survey results;
   
• Approval exemption: Photovoltaic array land that meets the above conditions does not need to go through non-agricultural construction land approval procedures;
   
• Procedure connection: The occupation of "other grassland" still needs to follow the legal procedures for grassland requisition and occupation examination and approval, and the specific implementation standards shall be subject to local regulations.
   

3. Compared with the trial version issued in 2020, a major change in the latest revised "Notice of the Ministry of Natural Resources on Issuing the Guidelines for Land and Sea Classification for National Land Space Survey, Planning, and Use Control" is that the "three major categories" of agricultural land, construction land, and unused land are matched with various land categories. As a primary land category, grassland corresponds to agricultural land, which is further divided into three secondary land categories: natural pastureland, artificial pastureland, and other grassland, meaning that all grassland, including "other grassland", is managed as agricultural land.
In summary, the current policy achieves system integration through "classification management + mode adaptation": "Other grasslands" are classified as farmland for management purposes due to land classification, However, provided that photovoltaic power generation project parties adopt the "grass-photovoltaic complementarity" model and complete the grassland requisition and occupation approval, they can be exempted from the "agricultural land conversion" procedures, thereby reducing land compliance costs.
 

Cases of illegal occupation of "other grasslands"

In recent years, many new energy projects have been administratively punished for illegally occupying "other grasslands" without completing the grassland requisition and occupation approval procedures. Typical cases are summarized as follows:
1. Case One (June 2023)
The Tongxin County Natural Resources Bureau of Ningxia issued an administrative penalty to a photovoltaic project company (Tongziranzifajueziz[2023]24). Upon investigation, the company occupied 17.32 mu of other grasslands without approval during the implementation of the photovoltaic project in Jinjiajing Village, Dingtang Town. The penalties included: ordering the return of illegally used land and a fine of 145,500 yuan.
2. Case Two (October 2023)
The Lhusui City natural resources department investigated and dealt with a photovoltaic project company's illegal occupation of 3,269.41 square meters of other grasslands for the construction of a switch station. Upon investigation, the company failed to legally handle the grassland requisition and occupation and construction land approval procedures and started project construction without authorization. The penalties included: in accordance with Article 77 of the Land Management Law and Article 57 of the Implementation Regulations of the Land Management Law, confiscation of the subject matter: the completed prefabricated cabins of the comprehensive building, cable trenches, and other facilities (total construction area 482.1 square meters, cable trench length 70.3 meters); fine amount: a fine of 980,800 yuan at the rate of 300 yuan per square meter.
3. Case Three (October 2023)
The Anning District Forestry and Grassland Bureau of Dingxi City, Gansu Province, issued an administrative penalty to a wind power project company (Anlinfajuz[2023] No. 011). The investigation showed that the company permanently occupied 18.8 mu of other grasslands in areas such as Xiangquan Town without completing the approval procedures. The penalties included: a fine of 12,500 yuan and a deadline to supplement the grassland requisition and occupation review procedures.
The above cases show that the enforcement of the supervision of "other grasslands" is continuously strengthening. If project parties fail to legally fulfill the grassland requisition and occupation approval procedures, even if the land is classified as unused land, they may still face administrative penalties such as returning land, fines, and deadlines for rectification, which may even affect the overall compliance of the project.
 

Is it necessary to pay farmland occupation tax for occupying other grasslands?

According to Articles 11 and 12 of the "People's Republic of China Farmland Occupation Tax Law" (hereinafter referred to as the "Farmland Occupation Tax Law"), those who occupy grasslands and other farmland for non-agricultural construction or temporary construction shall pay farmland occupation tax in accordance with the law. Among them, taxpayers who temporarily occupy farmland can apply for a full refund of the taxes paid if they complete reclamation and restore planting conditions within one year after the expiration of the approved period.
It is worth noting that although "other grasslands" are classified as unused land in land use classification, their legal attributes still belong to the category of grasslands defined by the Grassland Law. This "classification difference" leads to ambiguity in tax practice:
First, the possibility of taxation: tax authorities may include "other grasslands" in the taxable scope of the Farmland Occupation Tax Law based on the legal attributes of grasslands;
Second, differences in implementation: different regions may have different tax qualifications for "other grasslands" (as "grasslands" or "unused land").
For this, we propose the following risk prevention suggestions:
 

1. Prior confirmation: Before occupying "other grasslands," project parties need to clarify the tax attributes of the land with the local tax authorities;
    
2. Classified reporting: If it is determined to be taxable land, the tax obligations should be fulfilled according to the types of permanent or temporary occupation;
    
3. Tax refund coordination: For temporary occupations, the reclamation time node should be strictly controlled to ensure tax refund eligibility.
    

In summary, a dual compliance mechanism of "land use-taxation" needs to be established in the development of new energy projects: in addition to legally handling grassland requisition and occupation procedures (photovoltaic projects need to be registered as "grass-photovoltaic complementarity" type), proactive investigation of farmland occupation tax risks should also be carried out to avoid late payment fees or administrative penalties caused by tax disputes.
Notes:

[1] Notice of the General Office of the Ministry of Natural Resources on Carrying Out the 2023 National Land Change Survey (Ziranzi banfa [2023] No. 38): https://www.gov.cn/zhengce/zhengceku/202309/content_6906534.htm.

[2] Reply from the Inner Mongolia Autonomous Region Forestry and Grassland Bureau on "Whether other grasslands in the results of the third survey are grasslands?", June 3, 2023: https://lcj.nmg.gov.cn/hdjl/ldxx/202101/t20210130_827825.html?id=178283.

[3] Reply from the Shandong Provincial Department of Natural Resources (Shandong Provincial Forestry Bureau) on "Whether construction projects occupying "other grasslands" require review by the forestry and grassland department?", July 10, 2023: http://dnr.shandong.gov.cn/trsapp/qdetail/2/1585/81439.html.

[4] Reply from the Shanxi Provincial Forestry and Grassland Bureau on "Management Measures for Other Grasslands", July 24, 2023: http://lcj.shanxi.gov.cn/zmhd/zwzx_hd/index_7283.html?id=1916995.

[5] Notice of the General Office of the Ministry of Natural Resources on Carrying Out the 2023 National Land Change Survey (Ziranzi banfa [2023] No. 38): https://www.gov.cn/zhengce/zhengceku/202309/content_6906534.htm.